UnPAY, Tencent Research Institute Released Whitepaper on Indonesia’s Payment Market

BEIJING, CHINA / JAKARTA, INDONESIA -Media OutReach - 31 January 2019 - UnPAY and Tencent
Research Institute have jointly published a whitepaper on Indonesia's payment
market. This whitepaper focuses on hotspots and key issues of the payment
system in Indonesia and is the second of its "Venturing Out" series. It aims to
help Chinese payment companies expanding overseas gain a deeper understanding
of the world's fourth most populous country. The first whitepaper which was
published in October last year, honed in on Singapore's payment infrastructure.

Even as a
developing country, Indonesia is already the largest economy in ASEAN with a
Gross Domestic Product (GDP) of USD1.016 trillion in 2017. Its GDP growth rate
is expected to reach 5.3% in 2020. Cash is still highly utilised while
traditional bank account penetration rate is at a low rate of 34%. With a huge
untapped market, it is no surprise that Indonesia remains as a highly
attractive market in the digital payment and finance sector.

To operate in
Indonesia, payment companies must have a comprehensive license access system, a
regulation required by the Central Bank, Bank Indonesia, and Otoritas Jasa
Keuangan (OJK), the two financial and payment transaction services authorities.
Payment services are categorised into front-end and back-end. The front-end
body includes institutions that have direct contact with customers such as
acquirers, payment gateway operators and electronic wallets. Conversely,
back-end entities do not have direct contact with customers and these include
card organisations, clearing houses and final settlement agencies. Applicants
can only choose to operate in one category but they can apply for
multiple licenses in one category.

There are three
main pillars of Indonesia's payment infrastructure: card payment, peer to peer
(PTP) and electronic money. Card payment facilities are limited to credit card,
ATM card and debit card. PTP regulations oversee the purview of transfer/
payment gateway services and e-wallet service providers. It is worth noting
that payment service providers (PSPs) are prohibited from using virtual
currencies for PTP payments.

Under the
electronic money quota management, unregistered users can store a maximum of 2
million rupiah while a registered user can have a wallet limit of 10 million
rupiah. Electronic trading limit is 20 million rupiah per month. As of 21
December 2018, a total of 34 institutions in Indonesia had obtained e-money
business licenses. Bigger players in the market include GoPay, T Cash, PayPro
and OVO.

To ensure a more
cohesive and consistent payment structure, the Central Bank, Bank Indonesia has
established a National Payment Gateway (GPN) to integrate the fragmented
payment solutions. The GPN is a unified and interconnected clearing network
that will unite all payment channels in Indonesia, including ATMs, POS, payment
gateways and e-payment methods like credit and debit cards. In the pipeline,
the Central Bank, Bank Indonesia will be developing a universal QR code payment
standard for an interoperability and secure payments infrastructure.